Hey Newspaper Guys: Google's Not Making Money From News

from the so-wrong,-so-sad dept

Mon, Jul 20th 2009 5:15am — Mike Masnick

It's become popular for old school newspaper folks to hate on Google and other aggregators for somehow "profiting" off of their content. This is wrong on many, many levels. First, the aggregators send traffic to newspaper sites. They're promoting the newspapers' content. That's a good thing. But much more important is that they're barely profiting from it, if they're profiting at all. That's why it's odd to see some newspaper folks like Howard Weaver think that the answer to the newspaper industry's woes is to create their own aggregator and start making all that cash.

Except, uh, someone forgot the part where Google and the others don't actually make much, if any, money in aggregating all of that content. At best, it's a loss leader for most such sites. Chris Tolles, who runs Topix -- which is an aggregator that tried to play that game and realized how little money there was in it, before changing business models, has a fantastic response to Weaver that should be read in its entirety, but here's a brief snippet. It starts off in response to Weaver's claim that Google, Yahoo, Microsoft and AOL make ("conservatively") $15 billion from "news and news-related content":

Uh. No. That's just wrong.

AOL annual revenue is $4.2B, Google $21.8B, MSN ~$2B, and Yahoo $7.2B

So, since the grand total is around $36B, Google news is pretty much a non revenue products, and Google was doing just fine with little or no news results in their main index until the last couple of years. Yahoo does put news ina lot of their products, but certainly, nowhere near 50% of their advertising is sold against news, as is the same for AOL and MSN.

(Oh and last time I checked the newspaper industry advertising revenue was $37.85B)

News is a crap search product, and a loss leader, which is a big reason why Google news was in beta for years, and unmonetized, and why many news-centric searches get no ads next to them.

News is an unprofitable search. Since we at Topix are an adsense partner, and I am a downstream beneficiary to what revenues there are here, I know what kind of eCPM news brings and how hard it is to make money on aggregated "news" content.

....

So if you built a news aggregator, powered by journalists, this would somehow unlock the value and get to $1.5B in annual revenues?

NO. YOU WOULDN"T.

If that was true, Daylife, Inform, newsvine and the myriad of other startups would be actually making a ton of money and chewing up the pop charts. Or Digg for that matter, or the Huffington Post.

BUT THEY AREN'T, ARE THEY?

Closer to home, I have some experience in running a news site here at Topix, and having talked to Howard while he was at McClatchy (and one of our investors), I am somewhat puzzled since I actually talked him personally about the economics of news search a few years ago.

We've built a site which is,according to comScore, the #2 "newspaper" site online. We actually had a program for a while where' we'd give 50% of all ad revenues back to publishers who wanted to syndicate content to us. Didn't work worth a damn.

Once again, as these newspaper guys struggle to recognize what business they're in, they seem to reach out and attack Google, without even recognizing what it is they're attacking. They don't want to take the time to understand their own business (hint: it's never been "selling content"), so perhaps it's not surprising that they don't bother to understand the business of those they compete against either. And, if anything is causing the industry to falter it's that simple fact. If they can't understand the business they're in (or how others are beating them) then they're not going to do a very good job fixing themselves, will they?

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Filed Under: aggregators, business models, chris tolles, economics, howard owens, journalism, news
Companies: google

35 Comments

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Anonymous Coward, 20 Jul 2009 @ 5:22am

Remove the content, and what is google? An empty shell. They are entirely dependant on other people's information (to fill their search results and news pages).

Technically, everything Google does is a "loss leader", all in the name of eyeballs. Heck the android operating system is a loss leader to get searches from phones. It doesn't mean that the OS business is a bad business to be in for other companies.

The the newspaper people build a news megasite with plenty of ads and income potential, and it makes money, then if nothing else we know how much Google is "loss leading" to buy eyeballs.
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Shawn (profile), 20 Jul 2009 @ 5:48am

Re:
Remove the content, and what is google? An empty shell. They are entirely dependant on other people's information (to fill their search results and news pages).

Remove the internet?

Remove the newspaper content and Google is... well it is pretty much the same thing it is with the newspaper content.
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Mike, 20 Jul 2009 @ 6:17am

Actually, "Remove the content, and what is google?"
well, its a Great service provider, a good web based e-mail service, online documents/calendar etc. Google gears/Google tools are amazing.

But as Shawn said above, remove the newspaper content from google and watch as nothing changes.
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Anonymous Coward, 20 Jul 2009 @ 6:21am

Re:
Would Google be anything of those things without the ad views on the search engine? What is that, but other people's content sorted?

Google is entirely dependant on the world not saying "robots.txt to you!" as a group.
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Yosi, 20 Jul 2009 @ 6:28am

Re: Re:
"Content" that Google is sorting is not a news from newspapers, you know.

Trolls.
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Howard Owens, 20 Jul 2009 @ 6:28am

I'm me, not him
Um, Howard Owens and Howard Weaver are not the same person. Might want to correct your post.
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Gunnar (profile), 20 Jul 2009 @ 6:28am

Remove the content, and what is a library? An empty building. They are entirely dependant on other people's words (to fill their card catalogs and bookshelves).
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R. Miles (profile), 20 Jul 2009 @ 6:34am

Re:
Remove the content, and what is google? An empty shell.
This is one of the most asinine comments I've ever seen posted.

Google's technology isn't about the content, but the way to bring this content to users. It doesn't post any content at all. Ever. So what content is there to remove, genius?
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Anonymous Coward, 20 Jul 2009 @ 6:37am

Re: Re:
Search listings are content, genius. All those links, generates from other people's sites is actually content.

Remove the source content, and Google is a collection of empty software tools that do nothing for anyone.
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Carolyn, 20 Jul 2009 @ 6:47am

Hey Newspaper Guys
"If they can't understand the business they're in (or how others are beating them) then they're not going to do a very good job fixing themselves, will they?"

Analyzing the facts is a prudent first step to understanding any issue.
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Anonymous Coward, 20 Jul 2009 @ 6:49am

Re: Re: Re:
except give them: tools that let them publish documents online, a great email service, help finding places, a great phone service, and a number of other applications that provide great reasons for users to come to Google

damn, I can't believe I'm defending google, I'm not even a fan, but at least I recognize what they offer...
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R. Miles (profile), 20 Jul 2009 @ 7:01am

Re: Re: Re:
Search listings are content, genius. All those links, generates from other people's sites is actually content.
You just don't get it, do you?
Google *is* nothing until you, the user, generates this content once you enter what you're looking for.

The entire point of this article shows the stupidity of newspaper execs (and apparently some readers) that Google "steals" content and makes a profit off it by displaying it.

Simply not true.

LINKING is not the same thing as HOSTING/DISPLAYING content.

Considering the comments I've read regarding this article, it seems most don't get this simple fact.

No matter. With all the idiocy surrounding digital distribution, this issue pales in comparison.
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chris (profile), 20 Jul 2009 @ 7:30am

Re:
Remove the content, and what is google? An empty shell. They are entirely dependant on other people's information (to fill their search results and news pages).

the OP is right. google's product is search. if there is nothing to search for, google has no product.

all the google services, great tho they may be, are additional ways for google to get you to look at their ads.

is that product composed entirely of news? hell no.

is providing search with ads on top "stealing"? of course not.

that doesn't change the fact that a search engine needs people to search for stuff, AND it needs stuff out there for people to search for.

what the OP conveniently ignores is what google does to enable the publication and production of new content, i.e. blogger, youtube, google sites, google groups, web publishing features in google docs, sketchup, etc.

i think that free, effortless web publishing will come into play more and more as newspapers shrink and news types need a cheap convenient way to get their writing online.

google doesn't need news or news papers to survive because google's product is internet search, and in that context, news on the internet is just like any other content on the internet that needs people to find it.

therefore the implication that google benefits from other people's content is completely true. it IS in google's best interest for people to produce content, tons of it in fact, so much that you need some sort of tool to find and organize it for you.
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Anonymous Coward, 20 Jul 2009 @ 7:32am

Re: Re:
Yeah, kinda like the Yellowpages. If everyone started getting unlisted numbers, it'd just be a big book of empty yellow paper.
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Scott Seiter, 20 Jul 2009 @ 7:34am

At least Google is still giving these sources credit. This means backlinks which equals greater exposure all around.
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Igor, 20 Jul 2009 @ 8:02am

Business Models
Google's business is collecting information, any information - Web pages, images, videos, maps, geo-location data, anythingand finding ways to monetize it. Search + AdWords is one example. AdSense is another. They're still looking for other ones.
The big question though, is what is the business model of "old media"? Obviously selling content on physical media is dying (see Newspapers, CDs, DVDs. Also books in the near future). On the other hand none of them seem to have a clue how to make money online. Their current tactic seems to be trying to bully everyone back into the old business model.
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Jeff, 20 Jul 2009 @ 8:02am

Simple solution. Google should just consider each of these complaints as a tacit request for index removal.

AP announces it is going to start suing? Do not link to any AP articles. Do not include any sites which include AP articles. nytimes.com carries an AP article? Drop them from all indexes. I wonder how long it would be before nytimes.com drops the AP to stay in google's indexes?

Peter Osnos, the Vice-Chairman of the Columbia Journalism Review wants to try and extort money? Remove CJR from the indexes. Reinstate them only when Peter Osnos is no longer with the company.

Simple really.

If enough of these sites are removed, maybe the buggywhip makers will realize that google is just a fancy phonebook run by a private company who is not beholden to them and they are just shooting themselves in the foot rather that spending that time on creating buggywhips that people might actually want to buy.
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Anonymous Coward, 20 Jul 2009 @ 8:19am

Hey newspaper guys, go, stop Google bot from crawling your site, then see what good you have.
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John Henderson, 20 Jul 2009 @ 8:36am

Newspaper guys DO understand their business, thanks
Mike --

You keep writing that newspaper guys don't understand that their business is not selling content. In the interest of keeping this on the highroad, let me tell you you are simply, completely wrong.

Journalism 101: Publishers -- the business guys in news -- have _always_ known they are in the business of selling ads in exchange for delivering "eyeballs." The separation of the news and editorial functions has existed _precisely_ because of the differing aims of newsroom (delivering content) and ad sales (selling ads against readers).

If the problem is so simple, why don't you go out and produce an _original_ news Website that's even a shadow of the NYT or WaPo? C'mon Mike, you know these guys are chumps -- go eat their lunch!

Or am I missing something here.....

Cuz let's face it -- nothing on the Web comes close to the editorial excellence of the dinosaurs you mock every day.

John H.
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Anonymous Coward, 20 Jul 2009 @ 8:53am

Re:
exactly. people act like content is key, but as any struggling musician can tell you, all the content in the world doesn't mean squat if you can't get it in front of people. if you recall, google won the search engine war because you couldn't pay to rank higher in its index (unlike virtually all other search engines at the time). and if you ask any consumer what they're going to prefer (google's merit algo, or paid rankings), they're going to pick the merit algo every time.

on another note, having been a senior equity holder and software engineer at a major aggregator, i totally agree that they lose a lot more money than they make. even when you have an amazing recommendation engine (read: filtered RSS) and put everything under the hood to make it as simple as possible for the dumbest users, you're still not going to make money because the CPM charts plummet as you get to higher traffic volume. and since aggregators are most likely to be used by my fellow geek crowd, virtually everyone on the service is going to use ABP, further destroying your CPM. there's a reason why Digg is losing $5m a year.
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Ferodynamics, 20 Jul 2009 @ 9:05am

Newspapers aggregate too.
The truth will set you free, install WordPress.
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Peter, 20 Jul 2009 @ 9:22am

I have a question for TD. Is there *any* other subject you guys tackle here besides "newspapers should be grateful to Google"?

I've participated in several of those over the past few years but.. what's the point? You guys make THE SAME argument year after year, nothing changes. I get it, TD, you are for Google to publish content from other people and if those people (or companies) don't like it, they can take a hike and add a line to their robots.txt.

I tried to argue several times that the situation is a little more nuanced, and even got a few encouraging emails from other commenters, but the editorial stance at TD is as simplistic and one-sided as it's ever been.

Can you invent something new here, please?
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suckerpunch-tm, 20 Jul 2009 @ 9:41am

Re:
@Peter: Google doesn't "publish content from other people", they merely link to it. In the case of linking to newspapers, Google doesn't even make any money.

Thanks.
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Anonymous Coward, 20 Jul 2009 @ 10:29am

Google claims its mission is to organize all the information in the world. Last time I checked, information=content. How can anyone possibly argue that Google without content is not an empty shell?
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Anonymous Coward, 20 Jul 2009 @ 11:26am

Re:
People aren't arguing that this is false, they're arguing that it's meaningless. The Yellow Pages without phones is a blank book, an ocean without water is just empty space, and you without literacy skills wouldn't be posting.

Yes, we all love hypothetical thought experiments, but what does this have to do with anything?

Are you saying that Google should pay every website for providing a market? Well, I'm awaiting my check from every restaurant for having taste buds. And a check from every musician for having eardrums. And a check from every writer for knowing how to read...
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Vincent Clement, 20 Jul 2009 @ 11:47am

Re: Re:
And the world is dependant on Google (or any search engine) not saying "we are not listing your site". It works both ways.
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Luci, 20 Jul 2009 @ 12:26pm

Re: Newspaper guys DO understand their business, thanks
I do not read newspapers for one simple fact, this 'editorial excellence' that people like to bring up is simple rubbish. These newspapers contain so much bias that investing all of my attention to a singular, expensive source is worthless. It's for sheep. Anymore you need to read three articles from three sources to get close to the truth of the subject. That is annoying.
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Anonymous Coward, 20 Jul 2009 @ 12:35pm

Re: Re: Re:
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Mike Masnick (profile), 20 Jul 2009 @ 1:45pm

Re: I'm me, not him
Yikes. Sorry about that. Not sure how that happened.
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Carolyn, 20 Jul 2009 @ 5:40pm

Hey Newspaper Guys
It's funny how ideas travel.

Thanks to this thread, I meshed visits to several newspaper websites into an Intermediate Internet class at my library today. Visiting newspaper websites provided a terrific bridge for new computer uses moving into the uncharted waters of the Internet. The familiar newspaper format provided the foundation to explore new interactive web options online.

Thanks for helping out with today's class.
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Anonymous Coward, 20 Jul 2009 @ 6:41pm

Re: Re: Re:
If google says that to enough sites, they will affect their own basic search, which in turn will cost them users.

If no news style sites were indexed, and if there was no special "NEWS" tab on Google, where would people go to get the news? A news portal, their local news paper site, their local information site, cnn, foxnews, whatever. Instead more and more people just go to google, and "search" the news. What that means is less users looking at full news sites, and more people coming in on individual stories, less actual functional traffic for news sites.

If getting the news is a 5 page page process per story, google manages to borrow about half of those page views. In a world paying CpM / mill rates for advertising, "pay for exposure",or even pay by click, losing half the traffic, even if Google doesn't have a single ad, is still very expensive.

Remove the news from google, and those news search views have to go somewhere else, likely a media site. That the difference.

If the news media as a whole grea some nuts and did a group robots.txt of google, things would change.
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Jiminy Cricket (profile), 20 Jul 2009 @ 9:21pm

Re: Re:
The internet isn't going anywhere. why not google a clue?
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Anonymous Coward, 20 Jul 2009 @ 9:23pm

Re: Re: Re: Re:
Several fallacies in your statement here:

1) Google doesn't have news. Google points to news. And purely by the nature of the internet and the speed of communication, there will never NOT be news on Google.

2) If people could just go to media sites, they wouldn't be going to Google in the first place. I go to TechDirt directly because I already know about TechDirt. I go to Google to find sites that I don't know about.

3) If the news media as a whole went robots.txt crazy...some aspiring entrepreneurs would make news sites that weren't using asinine blocks, and would subsequently gain a massive amount of the internet market share.
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BigFN-J (profile), 21 Jul 2009 @ 8:44am

I think this comic sums it up nicely
http://leasticoulddo.com/comic/20090423
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make money online teacher, 11 Sep 2009 @ 7:17pm

I don't see anything wrong about that, that's how the new world spins, big fish eat the small fish
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